Federated Farmers hails rural banking report
Federated Farmers says the final report into banking competition is a significant step forward for rural New Zealand - and a vindication of the farming sector's concern.
Federated Farmers' 30-page submission to the primary production select comittee last week makes a compelling case for an immediate independent inquiry into rural bank lending. There's clearly disparity between rural and urban bank lending practices.
What's shocking is that changes made to Reserve Bank (RBNZ) rules would cost farmers even more than He Waka Eke Noa (HWEN), the abandoned primary industry partnership to reduce emissions.
Feds refer to a briefing to the previous Minister of Finance where it is noted banks claimed the changes to RBNZ rules would result in a 0.5% and 1.2% increase in interest rates. To put a 0.5% to 1.2% increase in rural lending costs in context, with total rural lending of approximately $62 billion, this equates to an additional cost of $310 million to $720 million per annum of interest costs. HWEN policy was forecast to levy $220 to $290 million from the sector by 2030.
Rising interest rates combined with high inflation are putting many farmers under huge financial pressure. Some are even being forced out of the industry.
The primary production select committee is investigating rural banking. While this is a good start, what farmers need is a full-scale inquiry undertaken by MPs.
A survey the Feds did of farmers in May this year found farmer satisfaction with their banks was at an all-time low, and the number of farmers reporting they had come under undue pressure from their bank is at an all-time high.
The Commerce Commission has begun a market study on personal banking. Frustratingly, however, rural lending is outside the scope of the Commission study.
It's time for politicians to give rural businesses and rural families some certainty about the fairness of the interest rates they're paying and the services that they're getting.
An independent rural banking inquiry is the way to go.
